Hard economic times hit computer industry

‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ The recent economic strife is causing industry after… ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ ‘ The recent economic strife is causing industry after industry to decline startlingly, and with them, the number of individual companies involved will significantly decrease as well. ‘ ‘ ‘ With fewer companies comes a smaller hiring pool and ultimately a large portion of the Americans without jobs. ‘ ‘ ‘ A vicious cycle begins: As employees from those unlucky industries begin to lose their jobs, money becomes scarce and the consumer spending that is so important to the U.S. economy becomes much more conservative. ‘ ‘ ‘ This all makes sense for industries like speculative investment banking and luxury automobiles. If you aren’t making a salary, why would you ever go out and buy a brand new BMW? ‘ ‘ ‘ The computer industry does not seem like an instant candidate for the economic chopping block. Computers are, after all, pervasive throughout all industries. Companies surely are investing in new technology, are they not? ‘ ‘ ‘ Yes and no. Companies will always need technology. Workhorse server machines for every industry will continue to be in demand ‘mdash; and, as a result, be provided by the major business machine manufacturers, namely Dell and Hewlett-Packard. ‘ ‘ ‘ Desktop computers, including home machines and the workstations that sit at employee desks doing mundane tasks like Internet surfing, light development, e-mail and office tasks, are not faring nearly as well. ‘ ‘ ‘ An article appeared on Economist.com on Jan. 15, 2009, describing a ‘reverse Moore’s Law’ rearing its ugly head in the mid-recession computer market. ‘ ‘ ‘ Moore’s Law, put most simply, says that, cost remaining equal, the processing power of available computer technology will double roughly every 18 months. ‘ ‘ ‘ The key phrase in Moore’s Law is ‘cost remaining equal.’ In a recession market, companies attempt to change cost structures by reducing investments in technology as much as possible. Companies attempt to get more out of their computer assets. ‘ ‘ ‘ Economist.com describes a ‘good enough’ phenomenon in the computer industry. For the average employee, ‘second-rate’ computing power is generally ‘good enough’. Thus, there is no impetus for companies to invest large sums in upgrading their employees to the best of the best, as was the case years ago. In terms of office tasks, e-mails and Internet surfing, my five-year-old Pentium 4 machine performs just as admirably as a brand new Core 2 or i7 machine. ‘ ‘ ‘ Similar arguments can be made for operating systems. Windows XP and its server equivalent, Windows Server 2003, considered archaic by a hopeful Microsoft, is ‘good enough’ for most companies. ‘ ‘ ‘ The cost and uncertainty involved in upgrading to the state-of-the-art Windows 7 or Windows Server 2008 is unattractive to most companies. As a result, a perusal of Microsoft’s stock history shows a general, though shaky, fall from a peak in late 2007. ‘ ‘ ‘ An article in ‘TheRegister,’ an online British-based publication that allows readers to keep tabs on the IT industry, published an article describing a strange trend in Dell’s sales records in May 2008. ‘ ‘ ‘ Dell is a major provider of computers across the entire usage spectrum, ranging from the tiny netbook and laptop market to the high-end server and processor workhorse market. ‘ ‘ ‘ Dell’s sales of servers and other high-end information crunchers rose in the first quarter of fiscal year 2009. ‘TheRegister’ reported, however, a drop in Dell’s desktop market. The desktop market ranges from the sale of machines to the end consumer ‘mdash; you and me ‘mdash; to the sale of workstations for use as Internet, e-mail and light development machines for corporations. ‘ ‘ ‘ ‘TheRegister’ also wanted to make sure that readers understood Dell’s general environment. Although Dell reported an increase in profits, Dell is also reducing its workforce. ‘ ‘ ‘ The saving grace of the computer industry will probably be a paradigm shift. Netbooks, in particular, will give computer companies a way to take advantage of business’ and individuals’ move toward buying cheaper, perhaps slower machinery. ‘ ‘ ‘ As cut down machines with slower processors and inexpensive components, Netbooks like Dell’s 9-inch offering and Asus’ EEPC provide a perfect little machine for users who want to cut costs and still surf the Internet, e-mail and write Word documents reliably.